What is in this article?:
- On-farm storage generally pays, caution urged this year
- Market extremely tight
The question is how much of a premium storage will pay this year?
The old saying regarding on-farm grain storage goes something like this: “bins pay dividends.”
This year, however, may be the one year in many that bucks conventional wisdom, according to one Ohio State University Extension agricultural economist.
“The question is how much of a premium storage will pay this year?”said Matt Roberts, an associate professor in the Department of Agricultural, Environmental and Development Economics in the College of Food, Agricultural and Environmental Sciences.
“A lot of farmers will look at last year and see big gains to storage and think those types of opportunities will be on tap this year, but I think that is much less likely to be the case.”
One of the biggest reasons Roberts is more skeptical about storage premiums this year is a significant potential for over-rationing, especially of corn, given the lateness of the crop.
With weather playing a significant factor in how quickly farmers were able to plant corn and soybeans across the Corn Belt, particularly in the Eastern Corn Belt, corn is several weeks behind a normal pace of development.
In Ohio, for example, the U.S. Department of Agriculture reported last week that only 56 percent of corn was at the dent stage, compared to 89 percent last year and 79 percent for the five-year average.
Likewise, only six percent of corn was rated mature across the Buckeye state, compared to 46 percent last year and 20 percent for the five-year average.
“In years like this with lots of uncertainty, we see lots of planned rationing, or what you might consider defensive rationing,” Roberts said. “Then, when we know how big the harvest actually is, if there is a lot more grain than people planned, prices really soften.”
USDA trimmed its production estimates for corn slightly in the September crop production estimates, to 12.9 billion bushels. While that estimate is trimmed from the beginning of the season, the department reports the crop could still be 4 percent larger than last year.